Economic activity continued to expand
in the first half of 2018, albeit at a slower-than-expected pace, mainly in
advanced Europe. Domestic demand, supported by stronger employment and wages,
remains the main engine of growth. However, the external environment has become
less supportive and is expected to soften further in 2019 owing to slowing
global demand, trade tensions, and higher energy prices. Tighter financial
conditions in vulnerable emerging market economies and maturing business cycles
are also weighing on activity. Accordingly, growth is projected to moderate
from 2.8 percent in 2017 to 2.3 percent in 2018 and 1.9 percent in 2019. That
said, it is expected to remain above potential in most countries in the region.